July 27, 2021 12:46 PM
The challenge of keeping up with regulatory requirements is so serious that industry observers suggest that the truly independent, small RIA model where the principal might also handle compliance with the aid of an outside vendor is no longer viable.
"Gone are the days of getting compliance in a box for $5,000 and surviving for a year," said Desireé Sii, president and CEO of SagePoint Financial. "Advisors truly don't know what it entails until the regulator's in their office, and then it's too late."
But the lure of independence is strong. In its 2020 report on advisor movement, Fidelity reported that, on a percentage basis, the independent RIA model had the most growth of any segment. That’s based on data from research and consulting firm Cerulli that counted advisors who moved to that channel compared with those who left it. By contrast, wirehouses and regional broker-dealers both saw net losses in their advisor ranks.